Income taxes

The provision (benefit) for income taxes from continuing operations consists of the following:



In thousands of dollars
2016	Current		Deferred			Total
Federal	$	189,900	$	25,854		$	215,754
State and other	13,107		(12,077		)	1,030
Foreign	1,537		(1,342		)	195
Total	$	204,544	$	12,435		$	216,979



In thousands of dollars
2015	Current		Deferred			Total
Federal	$	114,161	$	76,816		$	190,977
State and other	12,795		(2,247		)	10,548
Foreign	1,849		(1,060		)	789
Total	$	128,805	$	73,509		$	202,314



In thousands of dollars
2014	Current		Deferred			Total
Federal	$	139,710	$	51,245		$	190,955
State and other	23,114		20,232			43,346
Foreign	1,100		(930		)	170
Total	$	163,924	$	70,547		$	234,471

The components of income from continuing operations attributable to TEGNA Inc. before income taxes consist of the following:



In thousands of dollars
	2016			2015			2014
Domestic	$	667,556		$	568,534		$	927,453
Foreign	(6,406		)	(8,762		)	(5,046		)
Total	$	661,150		$	559,772		$	922,407

The provision for income taxes varies from the U.S. federal statutory tax rate as a result of the following differences:



	2016		2015		2014
U.S. statutory tax rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in taxes resulting from:
State taxes (net of federal income tax benefit)	2.8		3.2		2.4
Domestic Manufacturing Deduction	(2.8	)	(2.0	)	(1.6	)
Uncertain tax positions, settlements and lapse of statutes of limitations	(0.3	)	(0.2	)	(0.3	)
Net deferred tax write offs and deferred tax rate adjustments	(1.2	)	(1.6	)	(0.3	)
Non-deductible transactions costs	0.5		0.5		0.7
Loss on sale of subsidiary	—		—		(12.6	)
Non-deductible goodwill	—		0.4		3.0
Net excess benefits on share-based payments	(1.0	)	—		—
Other, net	(0.2	)	0.8		(0.9	)
Effective tax rate	32.8	%	36.1	%	25.4	%

Deferred income taxes reflect temporary differences in the recognition of revenue and expense for tax reporting and financial statement purposes. Deferred tax liabilities and assets are adjusted for changes in tax laws or tax rates of the various tax jurisdictions as of the enacted date.

Deferred tax liabilities and assets were composed of the following at the end of December 31, 2016 and December 31, 2015:



In thousands of dollars
	Dec. 31, 2016			Dec. 31, 2015
Liabilities
Accelerated depreciation	$	80,101		$	55,783
Accelerated amortization of deductible intangibles	667,015			663,545
Partnership investments including impairments	309,515			282,784
Other	7,570			9,057
Total deferred tax liabilities	1,064,201			1,011,169
Assets
Accrued compensation costs	32,361			28,119
Pension and postretirement medical and life	78,318			73,470
Loss carryforwards	197,812			184,117
Other	36,465			26,735
Total deferred tax assets	344,956			312,441
Valuation allowance	209,939			184,413
Total net deferred tax (liabilities)	$	(929,184	)	$	(883,141	)

As of December 31, 2016, we had approximately $388.9 million of capital loss carryforwards for federal and state purposes which can only be utilized to the extent capital gains are recognized. Losses of $361.5 million will expire if not used prior to 2020, while the remaining losses will expire if not used prior to 2022. As of December 31, 2016, we also had approximately $17.7 million of state net operating loss carryovers that, if not utilized, will expire in various amounts beginning in 2017 through 2036.

Included in total deferred tax assets are valuation allowances of approximately $209.9 million as of December 31, 2016 and $184.4 million as of December 31, 2015, primarily related to federal and state capital losses and state net operating losses available for carry forward to future years.

The increase in the valuation allowance from 2015 to 2016 is primarily related to additional federal and state capital loss carryforwards generated on the sale of certain capital assets during the year, as well as certain non-broadcast minority investments that would generate a capital loss if they were to be sold. If, in the future, we believe that it is more-likely-than-not that these deferred tax benefits will be realized, the valuation allowances will be reversed in the Consolidated Statement of Income.

Realization of deferred tax assets for which valuation allowances have not been established is dependent upon generating sufficient future taxable income. We expect to realize the benefit of these deferred tax assets through future reversals of our deferred tax liabilities, through the recognition of taxable income in the allowable carryback and carryforward periods, and through implementation of future tax planning strategies. Although realization is not assured, we believe it is more likely than not that all deferred tax assets for which valuation allowances have not been established will be realized.

Tax Matters Agreement

Prior to the June 29, 2015 spin-off of our publishing businesses, we entered into a Tax Matters Agreement with Gannett Co., Inc. that governs each company’s respective rights, responsibilities, and obligations with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, non-income taxes and related tax returns. The agreement provides that we will generally indemnify Gannett Co., Inc. against taxes attributable to assets or operations for all tax periods or portions thereof prior to the spin-off date including separately-filed U.S., state, and foreign taxes.

Uncertain Tax Positions

The following table summarizes the activity related to unrecognized tax benefits, excluding the federal tax benefit of state tax deductions:



In thousands of dollars
	2016			2015			2014
Change in unrecognized tax benefits
Balance at beginning of year	$	19,491		$	58,886		$	57,324
Additions based on tax positions related to the current year	213			6,095			12,426
Additions for tax positions of prior years	162			853			868
Reductions for tax positions of prior years	(1,214		)	(24,858		)	(4,563		)
Settlements	—			—			(129		)
Reductions for transfers to Gannett Co., Inc.	—			(18,804		)	—
Reductions due to lapse of statutes of limitations	(1,352		)	(2,681		)	(7,040		)
Balance at end of year	$	17,300		$	19,491		$	58,886

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $10.8 million as of December 31, 2016, and $12.5 million as of December 31, 2015. This amount includes the federal tax benefit of state tax deductions.

We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. We also recognize interest income attributable to overpayment of income taxes and from the reversal of interest expense previously recorded for uncertain tax positions which are subsequently released as a component of income tax expense. We recognized expense from interest for uncertain tax positions of $0.7 million in 2016 while recording income of $0.4 million in 2015 and $3.4 million in 2014. The amount of accrued interest expense and penalties payable related to unrecognized tax benefits was $1.5 million as of December 31, 2016 and $1.7 million as of December 31, 2015.

We file income tax returns in the U.S. and various state jurisdictions. The 2013 through 2016 tax years remain subject to examination by the Internal Revenue Service and state authorities. Tax years before 2013 remain subject to examination by certain states due to ongoing audits.

It is reasonably possible that the amount of unrecognized benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months. These changes may be the result of settlement of ongoing audits, lapses of statutes of limitations or other regulatory developments. At this time, we estimate the amount of our gross unrecognized tax positions may decrease by up to approximately $1.8 million within the next 12 months primarily due to lapses of statutes of limitations and settlement of ongoing audits in various jurisdictions.